David Clifton, Licensing Expert: Vital Statistics – Measuring the extent of gambling reforms required in the UK

As the well-known saying goes, “there are three kinds of lies: lies, damned lies, and statistics”. It was wrongly attributed to the nineteenth century UK Prime Minister, Benjamin Disraeli, but that’s not going to stop me from using it as the starting point for this monthly round-up of UK gambling law and regulation.

Fast forward 150 years from Disraeli’s time and our present British politicians may soon find themselves within a veritable tangle of statistical evidence as the UK Government review of the Gambling Act 2005 makes headway not only throughout the remainder of this year but also well into next year, according to comments made by a DCMS official at a conference on 25 February.

The results of statisticians’ work are likely to play an important part in gathering a robust evidence base of a type the government has described as “essential to effective policymaking and regulation”. I say that not only from the perspective of the industry but also from the perspective of other sides in the gambling reform debate.

The latter includes Carolyn Harris, Chair of the Gambling Related Harm APPG, who recently greeted the appointment of John Whittingdale as Government Minister with responsibility for overseeing the 2005 Act review process with the words: “Given the new appointee has a history of being strongly supportive of the industry, I very much hope he will be focused on the evidence and not influenced by aggressive industry lobbying.”

Experience to date has of course shown that other sides in the debate are not averse to aggressive lobbying themselves and there’s likely to be good deal more of that to come. So let’s look at some recent gambling-related statistics that have already seen the light of day and could well play their part in the coming months in measuring the extent of gambling reforms required in the UK.

Unlicensed online gambling

As briefly mentioned by me in last month’s ‘Licensing Expert’ article for SBC News, PwC’s ‘Review of unlicensed online gambling in the UK’ report was published by the Betting and Gaming Council on 4 February. This was three weeks after the Chief Executive of the Gambling Commission had written to Carolyn Harris commenting: “We know that licensed operators and their trade bodies are concerned about the impact of the illegal market, but our own evidence suggests that the impact may be being exaggerated”.

That comment surely needs to be reconsidered in the context of survey findings in the PwC report that found the proportion of UK online gamblers using an unlicensed operator has more than doubled from 2.2% to 4.5% in the last 1-2 years, equating to an increase from about 210,000 players in 2018-19 to about 460,000 in 2020. It also found that the share of online stakes with unlicensed operators had almost doubled from 1.2% in 2018/19 to 2.3%, corresponding to a doubling of stakes with unlicensed online operators from £1.4 billion to £2.8 billion.

We should remember that in 2020, the Commission described as “unsubstantiated” the risk that consumers will seek out illegal operators. It went on to say that “the response to that risk is to tackle unlicensed operators alongside improving standards in the legal market. Where unlicensed licensees are identified and found to be targeting British consumers, we will act to ensure they cease these activities”.

Some may understandably believe that a combination of (a) PwC’s statistics and (b) the recent proposal to increase Gambling Commission fees to tackle “increasing risks associated with unlicensed operators and the need to protect consumers and the industry from ‘black market’ encroachment” further bolster the Betting and Gaming Council’s December 2020 warning of the dangers posed by the illegal, online black market.

Gambling behaviour data

Fresh data published by the Gambling Commission on 23 February, illustrating the impact of Covid-19 on gambling behaviour in the UK in December last year, led to a call by the regulator for “extra operator vigilance …. during the current national lockdown conditions”. That should have come as little surprise given that, amongst other things, there had been a month-on-month increase of 6% in active accounts, 12% in bets, 13% in slots gross gambling yield and 11% in the number of online slots sessions lasting longer than an hour.

However, rather less headline space was given to the results of the Commission’s latest quarterly telephone survey findings relating to gambling behaviour. Despite finding that online gambling participation had increased by 3% to 24%, the survey found a reduction by half in the overall problem gambling rate from 0.6% in the year to December 2019 year to 0.3% in the year to December 2020.

It must be borne in mind that only 4,007 adults participated in the survey and the Commission described this reduction as “not a statistically significant decrease at the 95% level of confidence”, and other commentators have been right to warn that these reduced PG rates “should be taken with a large dose of salt”. However, this has to be regarded as a step in the right direction, particularly because the Commission has described (a) the ‘moderate risk’ rate as having shown “a significant decrease” (from 2.7% to 2.0%) and (b) the ‘low risk’ rate as “statistically stable” (at 0.9%).

This was effectively acknowledged by the Commission’s Executive Director, Tim Miller, in a conference speech given by him on 26 February, when, picking up on the above PG data, he said: “when you look back over the last five years, it does appear that there is an emerging trend showing a decline in overall rates of problem gambling”. Nevertheless, he added: “I want to be clear that this data cannot be seen as a reason to take our foot off the accelerator when it comes to protecting consumers. Instead, it should be seen as an opportunity to continue building momentum in our efforts to make gambling safer”.

That said, I suspect I am not alone in thinking it would be helpful if the Commission was to articulate rather more clearly what level of reduction it wants to see in the number of people affected by problem gambling, over what period of time this should occur and what would indicate good progress. That is exactly the same criticism that was levelled against the Commission a year ago by the National Audit Office, something that Tim Miller now says was “welcomed” by the Commission as helping it “to bring focus onto some of the key issues for gambling regulation in Great Britain”.

Affordability

As I write this, we await with bated breath the outcome of the Gambling Commission’s “Remote Customer Interaction Consultation and Call for Evidence” that concluded on 9 February, having attracted 13,000 responses. As many will know, that included a proposal by the regulator “to introduce stronger requirements, including that operators must conduct defined affordability assessments at thresholds set by the Commission“.

Understandably, and as I commented in my November 2020 article for SBC News entitled “Affordability Takes Centre Stage”, many believe that by effectively imposing monthly spending limits on gambling consumers, introduction of the Commission’s affordability proposal – possibly at a monthly loss limit as low as £100 – would constitute such a fundamental policy change affecting personal freedoms that it would be constitutionally wrong for it to be considered otherwise than in Parliament as part of the Government review.

Evidence that this belief extends beyond merely those who are closely associated with the industry can be drawn from a YouGov survey commissioned by the BGC, the results of which show that 51% are opposed to such spending limits being set by politicians, with only 27% indicating support for such a proposition. 59% agreed that “if there are too many limits placed on people to bet”, they will shift to the unlicensed and illegal black market, compared with just 10% who disagreed. The BGC also conducted research in 20 marginal constituencies where focus groups expressed concern about the danger of over-regulation, with a factory worker in Scunthorpe quoted by the BGC as saying something that should strike a chord with many MPs, namely: “You can’t regulate everything. You’ve got to take some personal responsibility”.

Gambling-related harm

Recent statistics relating to gambling-related harm have by no means been restricted to the Gambling Commission’s gambling behaviour findings to which I have referred above. Here are a few more.

Kindred Group has calculated that 4.3% of its Q4 2020 gross winnings was derived from customers at high risk of gambling harm. It also assessed that over 70% of customers detected by its Player Safety Early Detection System have positively changed their gambling behaviour upon detection and intervention from the company.

Kindred proposes to share updated such information on a quarterly basis in future as a measurement of the efficiency of its efforts to help detected customers regain control of their gambling, adding that it “wants to increase knowledge and transparency about the company’s sustainability work and contribute to a fact-based dialogue about harmful gambling with decision-makers and other stakeholders”. In so doing, its CEO, Henrik Tjärnström, re-stated Kindred’s ambition that 0% of its revenues will be generated from harmful gambling by 2023.

This news was greeted by many, including Maarten Haijer, Secretary-General of the European Betting & Gaming Association, who reported that, collectively, EGBA members made 1.2 million direct communications and interventions with their customers to promote safer gambling in 2019, representing an increase of 50% from the year before. During that same year, 63% of their customers used safer gambling tools, representing a marked increase from the previous year when just 37% used such tools.

At the recent KnowNow Player Protection Forum Digital Conference, attention was drawn to statistics within a first year report by GamCare’s Women’s Programme indicating that, whilst the number of women reporting gambling problems is increasing at double the rate of men, only 1% of women who experience gambling related harm contact the National Gambling Helpline. The significance of this issue was underlined by subsequent news that more than 50,000 women have registered with GamStop to self-exclude from all online gambling sites, leading GamCare CEO Anna Hemmings to say: “We must get to grips with the unnecessary shame and stigma women feel around asking for help with gambling”.

Considerable media publicity was given to statistics arising from a study of Lloyds Banking Group customer data undertaken by researchers from the University of Oxford, focusing on the extent of gambling related harms. The study’s headline finding was that high levels of gambling are associated with a 37% increase in mortality, with the top 1% of gamblers surveyed spending 58% of their income on gambling. The GRH APPG’s Carolyn Harris was not slow to seize on this, describing the statistical finding as “the most conclusive evidence yet of the gambling industry profiteering from the vulnerable and those in severe financial hardship” adding, for good measure and maximum publicity, that “the government needs to get a grip and properly regulate this toxic industry”.

She perhaps failed to notice the significant qualifications to their analysis conceded by the researchers themselves. She almost certainly omitted to take account of factors giving rise to the perceptive Regulus Partners criticism of the study that “when calculating expenditure, researchers looked exclusively solely at ‘outflows of cash’ without considering inflows ….. this is a critical omission and one that largely invalidates the study’s estimates of mean and median ‘expenditure’ (especially if any larger gross depositing is driven by the fairly common phenomenon of ‘recycling’ winnings)”.

 The final word… Almost

This month, I will very charitably leave almost the final word to Tim Miller of the Gambling Commission with, admittedly, a highly selective extract from his 26 February speech, but one which does nevertheless merit serious consideration by those who will be deciding in due course what changes to gambling law and regulation should emerge from the Government’s review process: “Amongst the debate around gambling, it often gets forgotten that a lot of progress has been made over the last three years.  For example, gambling-related harm is now recognised as a public health issue, which needs a public health approach.  That wasn’t universally accepted three years ago. Improvements have been made on markers of harm, the management of ‘VIP’ customers, games design, gambling on credit cards and customer interaction”. The industry is entitled to its fair share of credit for that.

AOB

Statistics aside, the following recent developments also merit inclusion in my monthly round-up.

1. GamCare’s Safer Gambling Standard is an independent quality mark that assesses the measures gambling businesses have put in place to protect their customers from experiencing gambling related harms. For the first time, a B2B version of this Standardfor gambling software developers and games platform providers has been released, together with an updated version of the Standard for B2C gambling businesses. I strongly recommend that businesses not yet committed to achieving the Safer Gambling Standard nevertheless read into this subject because they will inevitably find some excellent ‘good practice’ examples that they should be including in their approach to customer protection now.
2. GamCare has also launched its new Industry Code for the Display of Safer Gambling Information by gambling businesses, which is intended to “simplify how information about safer gambling tools, plus the support available for anyone struggling to control their gambling, is displayed on UK gambling websites and apps”.

3. The Betting and Gaming Council (BGC) has published new rules for its members that are designed to prevent football clubs from using their official social media accounts to promote gambling. The rules are contained in a Code of Conduct that came into effect on 1 March. Non-BGC members would be well-advised to take note of its terms too.
4. On 15 February the Gambling Commission announced publication of a revised version of its AML and CTF guidance for remote and non-remote casino operators, reflecting changes following the UK’s exit from the European Union. It came into immediate effect on that same date, so any affected operators not yet aware of its content should not delay further in checking it out.
5. The Commission has also made clear that, with effect from 1 June this year, there will be no fee refund if a licensing application is rejected because it is incomplete. This means that all applicants applying for an operating licence or for a variation to an existing operating licence must make sure they send in with their application all of the documents that are required by the Commission in support of it, rather than thinking they can send any in at a later stage.

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David Clifton – Director – ‎Clifton Davies Consultancy Limited